The value of listed Federal Government of Nigeria, FGN, Bonds on the Nigerian Exchange Limited, NGX, in the 8 months ended August 31, 2023 declined drastically by 99.9% to N148 .2 billion from N1.6 trillion recorded in the corresponding period of 2022.
Meanwhile, Vanguard’s findings from the data obtained on the NGX showed that the Bonds listing on the Exchange this year were mainly the FGN Savings Bond, and Sukuk while that of the previous year were a combination of both Federal Government Bond and Savings Bond.
The FGN Sukuk recorded the highest value in the period under review posting N130 billion.
Analysts stated that the decline in the listing of the FGN Bond this year showed that the Federal Government had borrowed less money from the primary market during the period under review compared to the corresponding period of 2022.
Commenting on this development, analyst and Vice Executive Chairman, HighCap Securities Limited, Mr David Adonri, said: “The reduction of FGN Bond listing could be an indication that government borrowed less in the domestic market and its implication is that it could affect liquidity in the secondary market”.
Continuing, he stated: “The decline could also be that the FGN Bonds were not listed on the Exchange during the period under review as only the Savings Bonds were captured as well as Sukuk.
“Both externally and internally, the immediate past government had taken more debt. This is increasing the risk of sovereign default and economic nightmares.
“The hard currency earning capacity of Nigeria may also not be sufficient now and in near future, to enable the present government to service the mounting foreign debt.
“Internally, the borrowing has now reached the alarming point of crowding out the productive real sector.
“This poses grave danger to the capacity of the real sector to create wealth and generate productive employment. In every capitalist economy like ours, government has primary obligation through policies and actions to prevent any crowding out effect and to ensure larger capital formation by the private productive real sector.”
In his own comment, Investment Banker and Stockbroker, Mr Tajudeen Olayinka, said: “If there was increase in debt listings in the market it brings about increased liquidity and trading activities in the market, but the drop in the eight month period could be largely as a result of higher yields in other competing instruments.
“The drop in the FGN Bond listing could also be that there was less borrowing by government in the primary market so not much to offer for listing in the secondary market.”(Vanguard)
